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ANNEXC
MINIMUM WORK COMMITMENT
WORK PROGRAMME AND BUDGET FOR
FIRM AND CONTINGENT “AGREEMENT AREA"
I. Firm and Contingent Agreement Areas
The Agreement Area comprises the Erbil Geological structure (the “Firm
Agreement Area" (FAA)) and the Demir Dagh Geological structure (the
"Contingent Agreement Area" (CAA)) all as defined in Annex A.
If Contractor, after drilling two wells under the Production Sharing
Agreement dated 25 June 2004 in respect of die Dihok .Area port ot the
Dihok Governorate (the "Dihok PSA") and one well in the FAA under this
Agreement, has not made a Commercial Discovery under the Dihok PSA
or this Agreement, then the following shall apply.
If the Contractor gives a notice to the Government prior to the end of the
First Phase to extend the Agreement Area the Contractor shall drill the
exploration well and acquire the seismic on the CAA forming part of UK-
Work Programme (Minimum Commitment) in III-4a). and the Agreement
Area shall for all purposes be deemed to be the FAA and the CAA and the
Work Programme in IIl4a) and the Financial Commitment in IH-tb) shall
apply and replace in all respects the Work Programme and Financial
Commitment in II-(a) and II-(b) respectively.
II-(a) Work Programme for FAA (Minimum Commitment)
The FAA has three Exploration phases with relinquishments alter I'1 and
2"J phase. There will he 1004 relinquishment after 3"' phase unless a
Development Area is defined.
Work Programme (Minimum Commitment) for FAA:
Fxploration Phase Period Seismic Exploration Relinquishment
(months) Acquisition Drilling (niter phase comph)
First Phase *) 48 50 km 21» I well 25%_
Second Phase 36 (optional) I well 2y,
Third Phase 36 (optional) well 1004
*) Contractor will carry out a typical geological field study as part of First
Phase commitment.
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Il4b) Financial Commitment for FAA (.Minimum Commitment!
Unit rate assumptions:
• Seismic - 2D: S20.(XXVkm
• Seismic - 3D: S>0.(XXYkni2
• Exploration w ell: S2.0 mill (exclusive of testing!
Summary of Minimum Financial Commitment:
exploration Phase Period
(Months) Financial
Commitment
First Phase 48 S3.0 mill
Secood Phase 36_ S2.0 mill
Third Phase 36 S2.0 mill
Total S7.0 mill
III-(a) Work Programme for FAA and CAA (Minimum Commitment >
The FAA and the CAA has three Exploration phases with relinquishments
after 1“ and 2"1 phase. There will be 100*5 relinquishment after 3*J phase
unless a Dev elopment Area is defined.
Work Programme (Minimum Commitment) for FAA and CAA
Exploration Phase Period Exploration
(mounts) Acquisition Drilling (after*phase compL)
First Phase •) ••) 48 70 km 2D 2 wells 25*5
•••)
Second Phase 36 (optional l 1 well 25*5
l lmd Phase 36 (optional! 1 well 100*5
•> Contractor will cam out a tvpical geological field study as part of First
Phase commitment.
First Phase Minimum Commitment includes all Minimum Commitment
work carried out under ll-(al in respect of the FAA and CAA.
" *»If Contractor has not been able to drill the additional commitment well in
the CAA and any appraisal wells necessary to define j Development .Area
prior to the expiry of the First Phase, then Contractor may request the
Government to extend the First Phase to allow Contractor to drill such
commitment well and appraisal wells and/or to relieve the Contractor from the
obligation to relinquish any part of the FAA ami the CAA ai the end of the
First Phase.
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Ill-lb) Financial Commitment for FAA and CAA (Minimum Commitment)
L'nil rate assumptions;
• Seismic - 2D; $20.(XXVkm
• Seismic - 3D: S50.00(Vkm2
• Exploration \scll S2.0 mill (exclusis e of testing)
Summary of Minimum Financial Commitment:
Exploration lliuse Period Minimum
(Months) Financial
Commitment
"48
First Phase *) $5.4 mill
Second Phase 36 $2.0 mill
rinrd Phase 36 $2.0 mill
Total $9.4 mill
*) First Phase Minimum Financial Commitment includes all expenditure
expended and forming part of Minimum Financial Commitment in I III*) in
respect of the FAA.
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